12-Month Bank Home Loans in Houston: Requirements, Tips, and More
Your office might be in the spare of your bedroom, or you might enjoy working from a co-working space. There is freedom, flexibility in working hours, and convenience of working from anywhere in the world. A recent study suggests that 15 million US citizens are interested in being their own boss. The struggle is less; you can achieve a higher degree of satisfaction. However, your nature of employment can create a problematic situation when you are willing to purchase a home.
There is good news: the housing market is opening up to people who do not have a regular job. If you are a freelancer or entrepreneur, you will fill the same application as everyone does. The refinancing might turn out to be challenging if you wait for a conventional loan. Move your focus from traditional mortgages to bank statement home loans in Houston. Your W-2s or paychecks make the whole difference in the mortgage process. The bank statement home loan makes sure your working history does not bring a change to your dream. So, let’s go through the basics of a bank statement mortgage in Houston.
How difficult is it to get a bank statement home loan?
The 12-month bank statement loan program is perfect for those who do not have evidence to show their purchasing power. For regular employees, taxes serve the purpose. To understand whether a freelancer can pay back the mortgage, the lender lays out guidelines. 12-month of personal or business bank statements, minimum credit scores of 550, and self-employment proof – these are the common requirements to be followed. So, self-employed people can get the benefit of legal tax deductions, but their net income is low. Nevertheless, their non-traditional income structure does not create a huge difference as long as they have documents.
Keep an eye on the debt-to-income ratio
DTI is the percentage of pre-tax monthly income which you will spend on the regular debts. Private lenders focus on it so that they can understand you do not possess high-risk factors. It indicates that you might have to deal with a higher mortgage payment. If you want to calculate the DTI, don’t forget to divide your current debt by your pre-tax income. Ups and downs on the monthly bills might include property taxes, home repairs, and utilities. But these are regarded as debts when you are about to calculate DTI. If the DTI goes beyond 50%, you must pay heed to cut down debt.
Prepare before applying for the mortgage
When you have set your eyes on the bank statement home loans, your self-employment will not cause a problem. But you can work on improving the chances of securing a loan. Start with getting a license and registration of your business. Then reduce the debt percentage, improve credit scores, and separate the personal and business accounts.
In essence, the whole process is very much the opposite of impossible. You can do it when you have a private lender by your side. So, start looking around today!